Credit card debt is all too common in the United States. According to CNN Money, an increase in unemployment levels makes more people than ever fall into credit card debt. While some people go into credit card debt buying luxury items, others rack up too many charges on credit cards by simply paying for their family's basic needs.
Credit Debt Drawbacks
It may seem as if credit card debt is not a big deal and that you can always pay it later, but the reality is that carrying credit card debt can affect you negatively in many ways. Those who carry a large amount of credit card debt may not be able to qualify for a mortgage or other loans. Even if they do qualify, they may have to pay higher interest rates because of their debt. Continually carrying credit card debt is also very stressful in addition to being financially unwise.
Debt Forgiveness
CNN Money recommends contacting your lender to discuss the possibility of debt forgiveness if you are dealing with a large amount of credit card debt. They state that if you've been laid off or had a medical emergency in your family, the credit card companies may be willing to work with you. For credit card debt forgiveness, CNN Money states that you usually have to be delinquent for more than 90 days.
Self-Management
Self-management of credit card debt involves making a budget and sticking to it. You should assess how much money you make and where it is all spent. The Federal Trade Commission states that instead of looking at your fixed expenses like a mortgage payment, you should first focus on decreasing your variable expenses like eating out, clothing and entertainment. Track all of your spending for at least a month and create a budget that allows you to pay off some credit card debt by decreasing your variable expenses.
Credit Counseling Companies
When it comes to credit counseling and debt management companies, you need to be very careful. The FTC states that while some credit counseling services are helpful, many of them are so expensive that they can actually drive you deeper into debt. Look for a free credit counseling program through a local library, university or military base.
Bankruptcy
The Federal Trade Commission states that bankruptcy, while never a good option, is an option to consider for some people who are so deeply in credit card debt that they can't get out. The commission states that bankruptcy should be the very last option as a bankruptcy can stay on your credit report for up to ten years, making it hard to get a mortgage or even a job. The FTC states that personal bankruptcy does not erase the responsibility of paying taxes, student loans or child support payments.
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